Aug. 1 (Bloomberg) -- Cnooc Ltd. is seeking about $5
billion in offshore financing from foreign banks to back its
acquisition of Canada’s Nexen Inc., according to two people
familiar with the matter.

China’s largest offshore oil and natural-gas explorer is
considering a bridge loan, as well as longer-term financing of
three or five years, the people said, asking not to be
identified because the details are private.

Cnooc last month agreed to pay $15.1 billion in cash to
acquire Nexen in the biggest overseas takeover by a Chinese
company. Cnooc, owned by the Chinese government and based in
Beijing, offered to pay $27.50 for each common share, a premium
of 61 percent to Calgary-based Nexen’s closing price on July 20,
according to its July 23 filing to the Hong Kong stock exchange.

“We intend to fund the purchase price from existing cash
resources and external financing,” a Beijing-based Cnooc
spokesman said via e-mail yesterday, declining to be identified
citing internal company policy.

Nexen’s oil and gas assets include production platforms in
the North Sea, the Gulf of Mexico and in Nigeria, as well as
oil-sands reserves at Long Lake, Alberta, where it already
produces crude in a joint venture with Cnooc. Its board
recommended the deal to its shareholders.

Reducing U.S. Dependence

The takeover comes as Canadian companies prepare to build
new pipelines for transporting the nation’s fossil fuel to Asia
in an effort to reduce its dependence on the U.S. market. The
companies intend to put the deal to the Committee on Foreign
Investment in the U.S. for review, according to a July 24 filing
with the U.S. Securities and Exchange Commission.

If approved, the takeover would mark the first time a
Chinese company would be the operator of leases in the U.S. Gulf
of Mexico, instead of a minority stakeholder.

“M&A-related loans will make up a significant portion of
lending this year in the Asia-Pacific region,” Siong Ooi, the
Hong Kong-based head of Asia-Pacific loan syndications at Bank
of America Corp. said in a phone interview yesterday. “It’ll be
driven especially by Chinese companies making overseas
acquisitions.”

Syndicated loans in the Asia-Pacific region outside of
Japan total $8.6 billion last month, bringing year-to-date
volumes to $167.9 billion, according to data compiled by
Bloomberg. That’s 37 percent down on $265.5 billion the same
period of last year, the data show.

Loan volumes have been dropping as banks’ wholesale cost of
funding increases and borrowers, faced with rising interest
costs, postpone refinancing. Average interest margins for U.S.
dollar loans in Asia ex-Japan rose to 270.8 basis points since
Dec. 31 from 247.8 basis points the same period of 2011.